British shoppers reined in their spending last month as a surge in fuel prices and higher food bills ate into household finances in a further sign the pound’s sharp devaluation is starting to bite.

Official figures showed sales volumes fell 0.3% in January, confounding economists’ expectations of a rise. Adding to evidence of ailing consumer sentiment, December’s weak performance was revised even lower in the latest sales update to show a 2.1% decline over the Christmas period.

January marked the third consecutive drop for retail sales. The decline will cast doubt on the consumer’s ability to continue powering the UK economy, which has so far proved more resilient than most economists had expected after June’s Brexit vote.

Over the November to January period, sales were down 0.3% on the previous three months, the weakest underlying performance for three years, according to the Office for National Statistics.

ONS senior statistician Kate Davies drew links between the retail slowdown and news earlier this week that inflation hit 1.8% in January, its highest level for more than two years.

“We have seen falls in month-on-month seasonally adjusted retail sales, both in conventional stores and online, and the evidence suggests that increased prices in fuel and food are significant factors in this slowdown,” she said.

Economists warn consumer spending will come under further pressure this year as wage growth struggles to keep ahead of inflation, squeezing people’s incomes in real terms. Jobs market data this week showed wage growth slowed at the end of last year despite unemployment remaining at its lowest rate for more than a decade.

“These figures provide the clearest evidence yet that rising prices will squeeze consumer spending throughout this year and into 2018,” said Andrew Sentance, senior economic adviser at the consultancy PwC.

“A sharp turnaround in the inflation environment has put a brake on the growth of retail spending – and we are likely to see more of the same as we move through 2017 and next year.”

The pound fell on the figures as they bolstered expectations the Bank of England would keep interest rates at their record low of 0.25% throughout this year, as policymakers seek to shore up confidence and spending in the post-referendum economy.

Sterling was down 0.7% to $1.2406 in mid-morning trading. It was at €1.1648 against the euro, a drop of 0.4% from Thursday. The pound is down 17% against the dollar and 11% against the euro since the referendum, making the cost of imports to the UK such as fuel and food more expensive. Fuel prices have also been pushed up by a rise in crude oil prices on the back of production cuts.

James Smith, economist at the bank ING, said inflation would push higher this year, putting more pressure on household finances.

“It looks like the UK consumer’s remarkable post-Brexit resilience is finally coming to an end,” said Smith.

“Food and fuel prices are soaring, and as the effect of a weaker pound continues to feed through, we expect inflation to break above 3% in the second half of this year.

“At the same time, wage growth is starting to moderate and the employment outlook is, at best, looking subdued. When you put all this together, real incomes look set to start falling and it could be increasingly tough 2017 for the UK consumer.”

There has been a silver lining to the pound’s fall, with the latest tourism figures from the ONS on Friday suggesting sterling’s devaluation has helped lure overseas tourists to the UK. A weak pound means their holiday spending money stretches further and hotels and department stores have already reported a boost from tourists.

The ONS said overseas residents made 9.2m visits to the UK in the final three months of 2016, up 6% on a year earlier. Visits from North America increased by 15% and visits from residents of EU countries increased by 8%.